Sonal Desai, Executive Vice President and Chief Investment Officer at Franklin Templeton Fixed Income, said the US 10-year Treasury yield is likely to remain above 4%, and that the Federal Reserve may not need further rate cuts unless the economy shows “shockingly weak data.”

Desai said the Fed’s policy stance is already accommodative, and that market fears of a growth slowdown are “more sentiment-driven than supported by data.” Despite several rate cuts that have brought the policy rate down to 3.75%–4% from 5.50%, she noted that long-term yields have held firm. “The curious thing is not that 10-year yields haven’t dropped below four, but more that they’re not at 4.50% or a little bit higher still,” she said.

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